U.S. tax burden may lead some Americans abroad to give up citizenship

State of play: Most of the world’s nations have a residence-based tax system.

• However, U.S. citizens who reside in another country still owe income taxes to the IRS because of the U.S.' citizenship-based tax system. This can lead to costly tax preparation or, in some cases, owing taxes to both countries, CNBC reports.
• Expats can face stiff penalties if they do not report foreign bank accounts or income.

Details: Among those weighing renouncement, 40% said filing taxes was too burdensome, the survey found.

• That was more than the next three reasons combined: concern about the current political climate (15%); married a non-US citizen abroad (12%); and disappointment in the direction of the U.S. government (10%).
• A majority want to see citizenship-based taxation repealed and one in five want to see the tax filing process simplified, the survey found.

In between the lines: An overwhelming majority of respondents — 86% — said they felt their concerns were less likely to be addressed by the government than citizens living in the continental U.S.

• In addition to the quarter of people who said they are planning or seriously considering ditching their citizenship, two out of five people said they “wouldn’t rule it out.”
• One in three said they would never consider it.

Yes, but: In 2020, roughly 9 million Americans were living abroad, the State Department estimates.

• The number of people who formally renounced their citizenship declined from a record-breaking 6,705 that year to 2,426 in 2021, CNBC reports.